HENRY PAULSON’S
SECRET TREASURY
Sightings from The Catbird Seat
~ o ~
December 22, 2008
Where'd the bailout money go?
Shhhh, it's a secret
By MATT APUZZO, Associated Press Writer Matt Apuzzo
WASHINGTON – It's something any bank would demand to know before handing out a loan: Where's the money going?
But after receiving billions in aid from U.S. taxpayers, the nation's largest banks say they can't track exactly how they're spending the money or they simply refuse to discuss it.
"We've lent some of it. We've not lent some of it. We've not given any accounting of, 'Here's how we're doing it,'" said Thomas Kelly, a spokesman for JPMorgan Chase, which received $25 billion in emergency bailout money. "We have not disclosed that to the public. We're declining to."
The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?
None of the banks provided specific answers.
"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.
Some banks said they simply didn't know where the money was going.
"We manage our capital in its aggregate," said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.
The answers highlight the secrecy surrounding the Troubled Assets Relief Program, which earmarked $700 billion — about the size of the Netherlands' economy — to help rescue the financial industry. The Treasury Department has been using the money to buy stock in U.S. banks, hoping that the sudden inflow of cash will get banks to start lending money.
There has been no accounting of how banks spend that money. Lawmakers summoned bank executives to Capitol Hill last month and implored them to lend the money — not to hoard it or spend it on corporate bonuses, junkets or to buy other banks. But there is no process in place to make sure that's happening and there are no consequences for banks who don't comply.
"It is entirely appropriate for the American people to know how their taxpayer dollars are being spent in private industry," said Elizabeth Warren, the top congressional watchdog overseeing the financial bailout.
But, at least for now, there's no way for taxpayers to find that out.
Pressured by the Bush administration to approve the money quickly, Congress attached nearly no strings on the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent.
"Those are legitimate questions that should have been asked on Day One," said Rep. Scott Garrett, R-N.J., a House Financial Services Committee member who opposed the bailout as it was rushed through Congress. "Where is the money going to go to? How is it going to be spent? When are we going to get a record on it?"
Nearly every bank AP questioned — including Citibank and Bank of America, two of the largest recipients of bailout money — responded with generic public relations statements explaining that the money was being used to strengthen balance sheets and continue making loans to ease the credit crisis.
A few banks described company-specific programs, such as JPMorgan Chase's plan to lend $5 billion to nonprofit and health care companies next year. Richard Becker, senior vice president of Wisconsin-based Marshall & Ilsley Corp., said the $1.75 billion in bailout money allowed the bank to temporarily stop foreclosing on homes.
But no bank provided even the most basic accounting for the federal money.
"We're choosing not to disclose that," said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion.
Others said the money couldn't be tracked. Bob Denham, a spokesman for North Carolina-based BB&T Corp., said the bailout money "doesn't have its own bucket." But he said taxpayer money wasn't used in the bank's recent purchase of a Florida insurance company. Asked how he could be sure, since the money wasn't being tracked, Denham said the bank would have made that deal regardless.
Others, such as Morgan Stanley spokeswoman Carissa Ramirez, offered to discuss the matter with reporters on condition of anonymity. When AP refused, Ramirez sent an e-mail saying: "We are going to decline to comment on your story."
Most banks wouldn't say why they were keeping the details secret.
"We're not sharing any other details. We're just not at this time," said Wendy Walker, a spokeswoman for Dallas-based Comerica Inc., which received $2.25 billion from the government.
Heine, the New York Mellon Corp. spokesman who said he wouldn't share spending specifics, added: "I just would prefer if you wouldn't say that we're not going to discuss those details."
The banks which came closest to answering the questions were those, such as U.S. Bancorp and Huntington Bancshares Inc., that only recently received the money and have yet to spend it. But neither provided anything more than a generic summary of how the money would be spent.
Lawmakers say they want to tighten restrictions on the remaining, yet-to-be-released $350 billion block of bailout money before more cash is handed out. Treasury Secretary Henry Paulson said the department is trying to step up its monitoring of bank spending.
"What we've been doing here is moving, I think, with lightning speed to put necessary programs in place, to develop them, implement them, and then we need to monitor them while we're doing this," Paulson said at a recent forum in New York. "So we're building this organization as we're going."
Warren, the congressional watchdog appointed by Democrats, said her oversight panel will try to force the banks to say where they've spent the money.
"It would take a lot of nerve not to give answers," she said.
But Warren said she's surprised she even has to ask.
"If the appropriate restrictions were put on the money to begin with, if the appropriate transparency was in place, then we wouldn't be in a position where you're trying to call every recipient and get the basic information that should already be in public documents," she said.
Garrett, the New Jersey congressman, said the nation might never get a clear answer on where hundreds of billions of dollars went.
"A year or two ago, when we talked about spending $100 million for a bridge to nowhere, that was considered a scandal," he said.
http://news.yahoo.com/s/ap/20081222/ap_on_bi_ge/meltdown_secrets
June 15, 2008
Economic crises put
Treasury chief to test
By Joelle Tessler, Associated Press
WASHINGTON — Henry Paulson, a veteran of more than three decades of Wall Street booms and busts, knew the good times couldn't last forever when he left his perch as head of Goldman Sachs two years ago to become President Bush's third Treasury secretary.
He just didn't know yet what form the downturn would take.
"I didn't realize I would have to learn so much about housing," Paulson said in an interview in his office at the Treasury Department, just steps from the White House. But, he added, "the possibility that I might be sitting here in the middle of all this didn't seem that unlikely to me."
Now, 10 months into housing and credit crises that are reverberating across financial markets and the broader economy, Paulson faces a long list of complicated economic problems. The dollar is extremely weak, oil prices are very high and, with home prices tumbling, foreclosure rates are spiking. Plus, Wall Street is reeling from its exposure to home-loan defaults, as evidenced this week by Lehman Brothers' decision to oust two top executives and raise $6 billion to offset its mortgage market risks.
Paulson's imprint on the Bush administration's response is clear. He was pivotal in negotiating the $168 billion economic stimulus package with lawmakers from both parties and played a key role in brokering the Federal Reserve-backed purchase of the troubled investment bank Bear Stearns by J.P. Morgan.
Yet to be seen is how history will judge these interventions.
The jury is out, for example, on whether the rebate checks sent to taxpayers — the cornerstone of the stimulus plan — will spur enough consumer spending to head off a recession. And while the Bear Stearns rescue may have prevented a potentially destabilizing collapse, the deal has some economists worried that the government may have encouraged more unhealthy risk-taking down the road by not allowing the investment bank to fail.
At the same time, Democrats complain that Paulson and the Bush White House are not doing enough to stem the tide of mortgage foreclosures and keep more Americans in their homes.
Mark Zandi, chief economist at Moody's www.Economy.com, believes the government had little choice but to put taxpayer money on the line for the Bear Stearns buyout. Yet he sees inconsistencies in the administration's unwillingness to do the same thing to help distressed homeowners....
Yet, even as he confronts the current turmoil, Paulson continues to press ahead with his plan to streamline regulation of the financial services sector. Among other things, his plan would expand the Fed's authority to oversee the financial markets and merge the federal agencies that supervise the securities and commodities futures markets.
Some have assailed the blueprint as an attempt to push through broad deregulation in the midst of an economic crisis that resulted from too little oversight. Critics are particularly concerned that the plan would weaken the Securities and Exchange Commission, which serves as a watchdog over Wall Street.
For his part, Paulson said the proposal does not aim to either expand or reduce regulation, but to update an antiquated system. He added that after all the Wall Street excesses he has witnessed over the years, he sees an important role for regulation and investor protection.
Although the blueprint stands little chance of passage before Bush leaves office, Paulson hopes it will shape the debate for the next administration.
For now, though, his top focus is stabilizing the economy.
"I've been taught to run to problems, rather than run away from them," he said. "I'll do my best right until I leave."
March 31, 2008
Senate's Dodd:
Paulson plan "not even close"
Yahoo News
WASHINGTON (Reuters) - The Democratic chairman of the U.S. Senate Banking Committee on Monday called the Treasury Department's plan to overhaul financial regulation "a wild pitch" that fails to address the housing market crisis.
Sen. Christopher Dodd of Connecticut said he welcomed the plan offered by Treasury Secretary Henry Paulson, but questioned its relevance in addressing falling home prices, rising foreclosures and the imminent threat of recession.
"To talk about overhauling the regulatory system is a wonderful idea. But frankly it doesn't relate to the issues we're grappling with," Dodd said on a conference call.
"I would call this a wild pitch. ... It's not even close to the strike zone," he said, drawing upon American baseball imagery to criticize Paulson's proposal.
Amid a deepening crisis in housing and credit markets, Paulson on Monday issued a sweeping plan that calls for giving the Federal Reserve more authority over Wall Street, cracking down on mortgage brokers, reshuffling the duties of some agencies and setting up a federal insurance regulator.
Although the plan has been under development for many months, Dodd said he had not been asked for input on it.
Noting that some of the ideas in the Paulson plan have been under discussion for years, Dodd said reorganizing the government was not the problem.
"The failure of the administration to utilize the tools they've been given over the years. ... That's the problem, not reorganization," he said....
October 6, 2007
Treasury official recused on 3Com
Paulson admits
conflict of interest
By Kevin Carmichael, BLOOMBERG NEWS
U.S. Treasury Secretary Henry Paulson won’t participate in any government review of the purchase of 3Com Corp. because his former employer, Goldman Sachs Group Inc., is advising 3Com in the deal, his spokeswoman said.
Boston-based Bain Capital LLC said Sept. 28 that it is teaming with Huawei Technologies Co., China’s biggest maker of telecommunications-networks equipment, to buy 3Com for $2.2 billion. Bain has voluntarily submitted the acquisition agreement for review by U.S. authorities for security concerns.
Paulson chairs the Treasury’s Committee on Foreign Investment in the United States, or CFIUS, which reviews international investments that have national-security implications. He was chairman of Goldman for eight years before moving to Washington.
http://www.telegram.com/article/20071006/NEWS/710060317/1002
October 3, 2007
Merger opens U.S.
defense to China
By Bill Gertz
A Chinese company with ties to Beijing's military and past links to Saddam Hussein's army in Iraq and the Taliban will gain access to U.S. defense-network technology under a proposed merger, Pentagon officials say.
Huawei Technologies will merge with the Massachusetts-based 3Com network-equipment manufacturer in a deal announced last week. Huawei has been linked to the U.N. oil-for-food scandal, which involved millions of dollars in payoffs to Saddam's regime during a time of U.N. sanctions.
The announced merger follows a July computer attack on the Pentagon that U.S. intelligence officials say involved Chinese military hackers. The hackers were detected breaking into Pentagon computers, including an e-mail system close to Defense Secretary Robert M. Gates.
"Huawei is up to its eyeballs with the Chinese military," said a defense official concerned about the deal. Huawei was founded in 1988 by a Chinese military officer and got its start building military communications networks.
A second official said the deal comes as the Pentagon has mounted an aggressive effort to thwart large numbers of computer intrusions from Chinese hackers and spies.
"And now we are proposing to sell the PLA a key to our front door. This is a very dangerous trend," the official said, referring to the People's Liberation Army, as the Chinese military is called.
3Com announced Friday the $2.2 billion merger with Bain Capital Partners LLC and noted in a statement that Huawei Technologies will acquire a minority interest and "become a commercial and strategic partner of 3Com."
Rep. Duncan Hunter, California Republican and ranking member of the House Armed Services Committee, said he is worried the deal will lead to the loss of sensitive technology to China.
"Specifically, I have some concerns surrounding the minority position of Huawei Technologies and what control the Chinese company might have over America's sensitive information," Mr. Hunter said. "In addition to encouraging the Pentagon to review how this deal may affect any of its classified contracts, I would encourage the Committee on Foreign Investment in the United States to conduct a thorough review."
A Pentagon spokesman said he is not aware that anyone in the Defense Department has asked Treasury's Committee on Foreign Investment in the United States to investigate the merger. A Treasury spokesman had no comment.
3Com, through a subsidiary, provides the Pentagon and the Army with intrusion-detection equipment, and the merger potentially will provide Huawei access to strategic computer-network vulnerabilities, said defense officials speaking on the condition of anonymity....
Defense officials said Huawei's past is the main cause for concern. Huawei technicians were involved in violating U.N. sanctions against Iraq in the early 2000s by illegally providing a fiber-optic network in Iraq that linked the Iraqi military's air-defense network.
The CIA-led Iraq Survey Group stated in its final report that Huawei and two other Chinese firms "illicitly provided transmission switches" for fiber-optic communications in Iraq from 1999 to 2002.
U.S. and British warplanes bombed the Chinese-made fiber-optic network in August 2001 after it was found to be part of Iraqi air-defense missile sites that were firing at U.S. and allied aircraft enforcing a no-fly zone.
Huawei also was involved in building a telephone-switching system in Kabul, Afghanistan, for the ruling Taliban militia prior to its ouster in 2001, according to U.S. intelligence officials.
The defense officials said it is unlikely that the Committee on Foreign Investment in the United States would block the deal because 3Com is being advised on the merger by Goldman Sachs Group Inc., whose former chairman is Treasury Secretary Henry M. Paulson Jr. White House Chief of Staff Joshua B. Bolten also is a former Goldman Sachs executive.
Gary Milhollin, an arms-proliferation specialist with the Wisconsin Project on Nuclear Arms Control, said Huawei was founded by a Chinese military officer and got its start with U.S. technology exports.
"In the past, Huawei has shown it's willing to help America's enemies after importing U.S. technology," he said. "And it has done so in defiance of U.N. regulations. So before we make more U.S. high technology available to Huawei, we should make sure it has changed its ways."
http://thefinalphaseforum.invisionzone.com/
See also: Year of the Dragon
December 30, 2006
U.S. TREASURY SECRETARY
ARRESTED IN GERMANY
PAULSON AND CHENEY SUBPOENAED BY TRIBUNAL
U.S. TREASURY SECRETARY HENRY M. PAULSON HAS BEEN ARRESTED IN EUROPE
SENTENCING INFLICTS EXTREME DISGRACE UPON THE UNITED STATES GENERALLY
U.S. TREASURY SECRETARY SEIZED AND BROUGHT BEFORE 'AD HOC' TRIBUNAL IN GERMANY ON A SUBPOENA HANDED OUT BY THE INTERNATIONAL COURT OF JUSTICE [OR 'WORLD COURT'] ON CHARGES OF MONEY-LAUNDERING, NON-PAYMENT OF THE WANTA $4.5 TRILLION AND FOR MISAPPROPRIATION AND/OR DIVERSION OF COLOSSAL $ SUMS.
VICE PRESIDENT CHENEY LIKEWISE AT THE RECEIVING END OF PARALLEL SUBPOENA FOR SIMILAR CRIMINAL OFFENCE(S).
GERMAN AUTHORITIES EXERCISED THE INTERNATIONAL SUBPOENA, BRINGING PAULSON (AND CHENEY) UNDER GERMAN JURISDICTION, GIVEN THAT GERMAN BANKS TRYING TO MAKE THE WANTA PAYMENT WERE TWICE PREVENTED BY MR PAULSON FROM DOING SO. WHEN THIS HAPPENED THE SECOND TIME, PAULSON WAS ARRESTED.
PAULSON CHARGED WITH DIVERSION OF FUNDS AND WITH NON-PERFORMANCE OF WANTA’S $4.5 TRILLION: HE WAS ARRESTED AFTER SEEING MME ANGELA MERKEL, WHO WOULD OTHERWISE BE COMPLICIT IN THE $4.5 TRILLION THEFT (WHICH OF COURSE SHE IS NOT). BUT THAT WAS THE SITUATION.
ARREST CONFIRMED BY SEVEN SOURCES: KEY U.S. TREASURY OFFICIAL ORDERED TO GERMANY, SUBJECTED TO A GAG ORDER, AND INSTRUCTED TO TESTIFY AGAINST HIS OWN U.S. TREASURY SECRETARY. HE HAS BEEN IN GERMANY FOR THE PAST TWO WEEKS, TESTIFYING BEFORE THE TRIBUNAL, STAFF OF THE U.S. CONSULATE AND THE GERMAN ATTORNEY GENERAL (EQUIVALENT) ABOUT THE ENDLESSLY FRUSTRATED ATTEMPTS OF AMBASSADOR WANTA'S CORPORATION, TO OBTAIN RELEASE OF THE FUNDS, AND ABOUT ALLEGED CRIMINAL VIOLATIONS BY PAULSON, GOLDMAN SACHS AND COMPANY, ET AL.
THE U.S. ‘MAINSTREAM MEDIA’ ARE WITHHOLDING THE BIGGEST SCANDAL IN WORLD HISTORY FROM THE MUCH-ABUSED AMERICAN PEOPLE.
By Christopher Story FRSA, Editor and Publisher, International Currency Review, World Reports Limited, London and New York
~ ~ ~
US Treasury Secretary Paulson has been arrested by German authorities on a subpoena issued by the International Court of Justice, and brought before an 'ad hoc' Tribunal accused of money-laundering, misappropriation/diversion of colossal amounts of money, and non-payment/non-performance on the $4.5 trillion Wanta Plan Settlement.
He has been sentenced to severe penalties....
Henry M. Paulson's arrest by German authorities implementing the 'World Court' subpoena, took place on 23rd or 24th of December 2006.
Although we have been 'sitting on' this intelligence since the Christmas weekend, pending further information, we now have very high-level confirmations from both London and Washington, and a total of seven sources for this intelligence....
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For more, GO TO > > > The Antechamber; The Catbird’s Forum
December 30, 2006
Is a Bankruptcy Bonanza on the Horizon?
As the saying goes, a rising tide lifts all boats. For the past few years, the relatively strong economy and low interest rate environment has been buoying companies that may not have survived in rougher waters. But as the tide turns on the economy, can these companies keep their heads above water?
According to Forbes, this country is facing a bankruptcy boom. It says many companies have used the current easy money environment not to repair fundamental problems in their businesses, but to simply pay creditors.
"A lot of people aren't fixing the problems they have with their businesses," Ingrid Bagby, a partner with law firm Cadwalader, Wickersham & Taft, tells Forbes. "They're just fixing their liquidity problems."
Lenders have not done their due diligence, says Forbes. They haven’t investigated how the money will be used, leading to a rising risk of bankruptcies and a lot of bad debt on their hands.
And it’s not chump change. Forbes points to a private equity investor who procured a $10 million investment for one of the companies in his portfolio. The hedge fund doling out the money never sent a representative to a due diligence meeting. When asked why, the hedge fund responded, "For a $10 million investment, it’s not worth sending someone."
Forbes points to unsustainably low default rates. According to Moody’s the current default rate for speculative grade bonds is 1.8 percent, well below the historical average of 5 percent. But many experts say that statistic will reverse quickly, with estimates averaging in the 2.5 percent to 3 percent range. Some even say the default rate could explode to around 7 percent or 8 percent.
"The default rates seem unsustainably low, at the same time the volume of potential candidates has never been higher," Mark Sunshine, CFO of financial services firm First Capital, tells Forbes.
"I think when [a correction] comes, and it is coming, it's going to be a big one," warns Jay Goffman, a partner in the corporate restructuring department at law firm Skadden Arps.
* * * * *
Paulson: Hedge Funds Positive for Market
U.S. Treasury Secretary Henry Paulson said Friday it was important to make sure hedge fund liquidity and borrowing were closely monitored, but said they were making a helpful contribution to financial markets.
December 4, 2006
Nonprofit accountability needed
Public should demand better regulation of nonprofits
By Mary M. Lassen and Anna Kristina C. Moore, Philanthropy Journal
One can hope that recent news about U.S. Rep. Bob Ney and five nonprofit organizations allegedly linked to Jack Abramoff's illegal lobbying activities would scare others from committing the same mistakes.
But experience shows neither conscience nor self-regulation is enough to ensure that people in positions of authority will uphold principles like accountability and transparency in their dealings.
There are always people willing to take the risk when the prize is influence, money and power.
In a 2003 study, Marion Fremont-Smith and Andras Kosaras noted media reports of over 150 incidents involving criminal and civil misconduct by leaders of charitable organizations in 1995 to 2002.
And this does not even include disputes settled in and out of court or investigations that are not publicly disclosed. This weakens trust in and support of the charitable sector.
A recent CNN poll shows that 50 percent of Americans think Congress is corrupt.
The tentacles of political corruption regrettably have some nonprofit and charitable organizations in their grasp.
Ironically, we depend on these same elected officials to provide the IRS and other regulators with the resources needed to oversee tax-exempt organizations to the full extent of their mandates, irrespective of who controls Congress.
The good news is that we – the voting, tax-paying public – have the power to demand that our elected officials stop squandering the numerous opportunities to address weaknesses in our legislation.
Members of Congress should join Republican Sen. Charles E. Grassley of Iowa in his efforts to pass laws to eliminate exploitation of the nonprofit sector.
They can begin by mandating better disclosure for donor-advised funds and minimum payments for supporting organizations, and by cracking down on abuses by members of Congress, their families and associates.
The nonprofit and philanthropic communities will need to reinvigorate self-regulatory initiatives such as codes of standards similar to efforts by the Maryland Nonprofit Association and the Evangelical Council for Financial Accountability.
There are signs that public confidence in charities is improving, but with scandals marring the philanthropic sector – such as those involving United Way, the Nature Conservancy, the Katrina and 9/11 funds, and Abramoff -- it's still on shaky ground.
A drop in confidence that translates into a drop in donations will severely affect groups that depend on charitable dollars to provide assistance to disenfranchised populations.
Misuse and abuse of nonprofits and foundations violate the spirit of community, generosity and social responsibility that sustain philanthropy in the U.S.
Mary M. Lassen is interim executive director and Anna Kristina C. Moore is a communications associate at the National Committee for Responsive Philanthropy in Washington, D.C.
© 2006 Philanthropy Journal. All rights reserved.
July 12, 2006
Is Bush turning green?
By Joyce Morrison, www.freedom.org
The selection of Henry Paulson to be the new Secretary of Treasury should be a red flag to those who believe in the protection of property rights. Has President Bush been listening to the wrong people or is he making recent debatable decisions on his own?
The appointment of former Idaho governor, Dirk Kempthorne, to serve as Interior Secretary left many wondering why Bush chose this man whose philosophy of public lands is not a balanced approach. The Liberty Matters organization quoted Kempthorne as saying, “When there is a conflict between conserving resources unimpaired for future generations and the use of those resources, conservation will be predominant.”
John H. Sununu, former Chief of Staff for George Bush, Sr. and former governor of New Hampshire, when asked about the philosophy of our current President Bush very carefully stated, “he has been badly served by a staff who did not live up to their resumes. The issues faced today are hard issues and men are asked to deal with issues they know nothing about.”
Sununu continued, “We have large energy reserves but we did not get a long term energy policy in the 2005 energy bill.”
Just speculation, but could Bush be thinking that to “cut a deal” with environmentalists by appointing Paulson to a cabinet position bring a compromise to the long term planning of energy? If a deal was made, let’s hope it was worth it.
Paulson openly promotes the theory of global warming and the Kyoto Treaty contrary to the stand taken by President Bush that the treaty would wreck our economy. He is also an extreme environmentalist which differs from the common sense President Bush has taken on a balanced approach to caring for the environment.
Those who have studied environmentalism can attest to the fact that it is not about “saving the environment,” but is a high dollar game and a method to “control” the land. If a depression should hit this nation, we would see how important the “environment” would be to these environmental leaders.
Henry Paulson spent 32 years at the Wall Street firm Goldman Sachs and was currently CEO. He also served as the president of The Nature Conservancy. He was approved by the Senate Finance Committee to be our next Treasury Secretary. He was confirmed by the full Senate with no questions asked.
This multi-millionaire is as green as the money he will be dealing with. The extreme environmental groups and liberals are shouting with joy while conservatives are trying to figure out why conservative senators did not try to block this appointment.
Instead, a new regulation was written by the IRS, which Paulson will head, that he could sell his extensive Goldman Sachs stock holdings without incurring a tax penalty.
Carl Pope, executive director of the Sierra Club told the Associated Press, “It isn't every day that the Sierra Club finds itself welcoming a nomination to George W. Bush's Cabinet with ultra-conservatives decrying the move,"
Nature Conservancy's CEO, Steve McCormick, said Paulson's "mark on the conservancy is indelible. He has helped us think big -- very big -- about our conservation ambitions."
The Ledger.com reported the above quotes as well as an interview this year with Muckraker, the website for the Center for Investigative Reporting. Paulson told them environmental health and financial well-being go hand in hand: "The environment and the economy have been totally misconstrued as incompatible. They are opposite sides of the same coin -- you can't consider one without the other.”
The Novak column in the Chicago Sun Times reported:
Bush administration officials are delighted to hear that Wendy Paulson, the liberal Democratic wife of Treasury Secretary-designate Henry Paulson, intends to remain in their upper West Side luxury apartment in Manhattan without moving to Washington.
Since 1997, Wendy Paulson has contributed $32,800 to Democrats, compared with $10,500 to Republicans ($1,000 to Sen. John McCain for his 2000 presidential run and the rest to liberal Republicans). Her contributions include $6,000 to Sen. Hillary Clinton and $5,000 to HILLPAC (Clinton's political action committee).
Republicans fear that if Mrs. Paulson is much in evidence at events in the capital, she would be subject to questions from reporters that might result in embarrassing answers.
Paulson will be closely watched to see if he plays favors by giving special tax treatment to The Nature Conservancy and other environmental groups. These organizations have repeatedly pushed for special tax breaks.
Liberty Matters reports:
Paulson is extremely weak on property rights...He has basically used corporate assets to pursue his personal interests," said Steven Milloy, Free Enterprise Action Fund portfolio manager. Wall Street Journal's David Wessel wrote: "...given [Paulson's] record in using Goldman's power and money toward environmental ends, he just might use his clout to push the administration toward dealing with climate change or even…considering an energy tax." But his role as Chairman of The Nature Conservancy, which an in-depth investigative report by the Washington Post revealed has a history of questionable deals, should have raised the concern of at least one Senator. But then, Mr. Smith doesn't go to Washington anymore.
The Nature Conservancy has become “partnered” with almost every government agency and receives huge amounts of money in the form of grants and agreements. The Washington Post did a series on TNC and exposed many of their dealings which questioned their integrity. They were investigated by a Senate panel and yet they have more control of the government than elected officials and now it appears they will receive cabinet status by way of the Treasury Department.
Paulson has reportedly made 70 trips to China in recent years and earned millions for Goldman Sachs from financial dealings “directly with the Peoples Republic of China and its state industries such as the Bank of China.” Guess who is one of the major holders of the United States debt? You guessed it…..China.
Analysts report that Japan and China hold much of the United States debt which runs into billions of dollars. In the real world, whoever holds someone’s debt requires collateral. The U.S. no longer uses gold or silver as a standard, so what would the United States have to use as collateral for this purchased debt?
The Nature Conservancy, which has about $4 billion in assets, has been called the real estate agent for the U.S. government as it buys land and then sells it back to the government. The U.S. government owns approximately 30% of the land in the U.S. not including property owned by state and local governments and environmental organizations. Much of the land owned by the U.S. and conservation groups contains valuable resources.
We certainly would hope the day never comes when our land and resources would be used as collateral for our nation’s debt.
Paulson’s wife has reportedly contributed $410,000 to the League of Conservation Voters. This is the organization that supported Kerry for President. Each year they select the “dirty dozen” legislators who do not play their game and spend big dollars trying to defeat them. Big money passes through this organization and they boast their power.
According to the League of Conservation Voters, they have unveiled the next seven members of their 2006 “Dirty Dozen.” Included in this group, which LCV is calling the “Oil Slick Seven,” are Senators Rick Santorum (PA), Conrad Burns (MT), and Jim Talent (MO) and Representatives Richard Pombo (CA), Katherine Harris (FL), Heather Wilson (NM), and Bob Ney (OH). LCV is currently or will be in the near future actively campaigning to defeat all of these Members of Congress in the 2006 elections.
According to Nature Conservancy’s CEO, Steve McCormick, under Paulson’s tenure, The Nature Conservancy made significant gains in global conservation and in strengthening governance and accountability. As Chairman, he played key roles helping define the organization’s global conservation vision, expand into new geographies and enhance the organization’s partnerships with the private and public sectors.
The White House News states that “the Secretary of the Treasury has one of the most important jobs in the federal government. The Treasury Secretary is responsible for recommending and implementing policies dealing with taxes, financial markets, federal spending, trade and other issues affecting the health and competitiveness of the American economy. The Treasury Secretary oversees the minting of U.S. currency, the management of public finances, and the enforcement of important laws, including our efforts to crack down on terrorist financing. The Treasury Secretary is the leading force on my economic team and the chief spokesman for my economic policies.”
Add this little twist to the plot that Robert Zoellick, who served in the number two position in the State Department will now take over the spot at Goldman Sachs vacated by Paulson.
www.freedom.org/news/200607/12/morrison.phtml
June 26, 2006
Henry Paulson's Treasury
by NOMI PRINS, The Nation
In the coverage of President Bush's nomination of Henry J. "Hank" Paulson to replace John Snow as Treasury Secretary, I've lost count of the number of mainstream media discussing the "well-worn path" between Goldman Sachs and official Washington. But just because a road is well traveled doesn't mean it leads in the right direction.
Tapping officials from the venerable investment bank for policy-making positions in government is a practice that dates back to the Eisenhower Administration, when John Foster Dulles, whose law firm represented Goldman Sachs, was appointed Secretary of State.
In more recent history, Goldman Sachs co-CEO Robert Rubin instigated massive banking deregulation in the five years he served as Treasury Secretary in the Clinton Administration. Rubin quit in 1999 for a multimillion-dollar position at Citigroup. Around the same time, Jon Corzine lost an internal political battle as Paulson's co-CEO, rebounding first as the Democratic senator of New Jersey and now as governor.
In March 1999, Joshua Bolten left Goldman Sachs to become policy director of the Bush-Cheney campaign, later serving as policy adviser, director of the Office of Management and Budget and ultimately White House Chief of Staff. Stephen Friedman, former Goldman co-CEO with Rubin, was appointed National Economic Council director by Bush from 2002 to 2005.
Enter Hank Paulson, who has spent the past eight years as Goldman Sachs chairman and CEO. He joined the firm in 1974 after serving as a member of the White House Domestic Council in the Nixon Administration.
Under Paulson's leadership, Goldman Sachs has become one of Washington's most generous patrons. Paulson is a top donor--mostly to the GOP. (To the chagrin of critics on the right, Paulson is also an ardent environmentalist and is chairman of The Nature Conservancy.)
As Treasury Secretary, Paulson may have to dump some stock (he is the single largest shareholder in Goldman Sachs according to its 2006 proxy statement, with 4.6 million shares) to decrease his overwhelming conflict of interest, but even if he sells his unrestricted stock, he'll still have several hundred million bucks in RSU (restricted stock unit) awards, which are not immediately sellable. This could place him in a position where maintaining his financial well-being could necessitate supporting policies positive to Goldman's short-term stock price over long-term needs of the general economy, like dividend tax cuts.
What first struck me upon news of Paulson's possible appointment was that he's too smart to take on this task, with Bush's approval ratings for his economic policies hovering around 40 percent. Then, I got it. Paulson is Bush's last hurrah--and his last chance. Known as a pragmatic and decisive leader, Paulson will likely be more proactive than Snow, whose sole job essentially was traipsing up to Congress once a year and urging lawmakers to raise the US debt cap by another trillion dollars so we wouldn't default on our interest payments to China.
Bush's economic legacy is a weak dollar (who wants to invest in a country teetering on the brink of default?) and tax cuts for the super-wealthy that have created an outrageous deficit and debt. And that legacy benefits men like Paulson at the expense of middle-class Americans and the working poor. It will be a stretch for him to argue for prudent budgeting, while facing the country's highest national debt ever, without cutting social programs to get there.
This shaky economic legacy also makes Paulson's possible appointment more challenging and hence more potentially dangerous than Rubin's. He must rally citizens into believing their individual economic condition is better than it is. Plus, he needs to convince international investors that the dollar isn't in free-fall, despite the abundance of American debt. That's a lot harder than convincing a board of peers as chairman to compensate your fellow senior executives hundreds of millions of dollars.
When Robert Rubin hit Washington, mega-consolidation in the banking industry that led to "Enronian" corporate scandals had yet to be given the 1999 legislative go-ahead that smashed Glass- Steagall, FDR's New Deal Act separating commercial banking from investment banking. Today, things are more complicated and less regulated.
Separately, the fact that Paulson presided over Goldman Sachs during a period when the firm increasingly transformed itself from a classic investment bank relying heavily on profit from stable fees into something resembling a hedge fund, in which record profits were based on trading bets made with borrowed funds, doesn't make him the most credible proponent of debt or deficit reduction.
So for Paulson to nab the top Treasury spot is multiples worse. Still, he is strong and confident. That's the scary part. Bush gets a cheerleader to help cement his ideas of individualism, from more tax cuts for the rich to privatization of anything politically viable at the moment.
In a highly touted post-Enron-implosion speech at the National Press Club in mid-2002, Paulson urged reform in the financial system in three areas: accounting policy, standards of corporate governance and conflict of interest. "Conflicts are a fact of life in many, if not most, institutions, ranging from the political arena and government to media and industry," he said. "The key is how we manage them."
Or how we ignore them.
The question isn't how it's a conflict of interest for Paulson to preside over our country's economy but how it's not. According to the first general statement laid out in the "Standards of Ethical Conduct for Employees of the Executive Branch": "Public service is a public trust requiring employees to place loyalty in the constitution, the laws and ethical principles above private gain."
Even if Paulson ultimately sells all his stock and finds a way to offload his restricted stock, he will wield in the meantime enormous influence over the Treasury bond and foreign currency trading positions of Goldman, with every policy decision on debt issuance or the dollar that he makes. What's good for Goldman isn't necessarily good for Middle America.
Therein lies the conflict of a man whose entire career has been predicated on successfully promoting corporate welfare over public interest.
This article can be found on the web at http://www.thenation.com/doc/20060619/prins
June 5, 2006
HENRY PAULSON
OUR NEXT SECRETARY OF FRAUD
By Ed Henry, Ether Zone
Now that we are about to have the third Secretary of the Treasury in the last five years and the second CEO of Goldman Sachs appointed to the position, do you think the media and Congress critters will ask the right questions. For instance, Mr. Paulson: how do you feel about federal trust funds? Or: can the national debt be paid off with anything other than taxpayer money?
Since all federal trust funds are managed by the Secretary of the Treasury, these would certainly seem to be legitimate and important questions to ask, but I’m willing to bet that these subjects never come up and, if they do, they will not be probed beyond the most superficial response.
We’ve already had two Presidents, the first Secretary of the Treasury in the G.W. Bush administration, trustees appointed to oversee these accounts, and a great many other authorities who have openly confessed to the meaninglessness of these so-called “trusts” – currently numbering 137 and accounting for $3.5 trillion or forty-three percent of the national debt – that have no value whatsoever except as a means to tax and double tax the American taxpaying public.
The Secretary of the Treasury has no greater responsibility than the management of these bogus accounts. Many are being drawn down every month with taxpayer money taken from the “general fund” of current receipts of taxpayer money or money borrowed. And some are drawn down every month in the most ludicrous form of accounting imaginable.
Many have simply been set-up with nonmarketable bonds that are demands on the treasury and are labeled as “gift accounts” or funds that are nothing more than perks for the federal government. (See: Trust Fund List)...
Among the 137 accounts we also have the Social Security trust fund currently standing at $1.9 trillion and accounting, by itself, for 23 percent of the national debt. Every surplus dollar we give them in excessive payroll taxes ends up as debt so we or our children can pay it again plus interest. (See: The Pay-It-Again Sam Scam)
And George W. Bush tells us it’s “double taxation” for stockholders to pay a capital gains tax after corporations have already paid income tax on their profits.
The economic problems of the United States will never be resolved as long as we have this sort of dishonesty, fraud, and outright extortion. We are the Enron to the world.
"Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact."
www.etherzone.com/2006/henr060506.shtml
December 30, 2006
Is a Bankruptcy Bonanza
on the Horizon?
As the saying goes, a rising tide lifts all boats. For the past few years, the relatively strong economy and low interest rate environment has been buoying companies that may not have survived in rougher waters. But as the tide turns on the economy, can these companies keep their heads above water?
According to Forbes, this country is facing a bankruptcy boom. It says many companies have used the current easy money environment not to repair fundamental problems in their businesses, but to simply pay creditors.
"A lot of people aren't fixing the problems they have with their businesses," Ingrid Bagby, a partner with law firm Cadwalader, Wickersham & Taft, tells Forbes. "They're just fixing their liquidity problems."
Lenders have not done their due diligence, says Forbes. They haven’t investigated how the money will be used, leading to a rising risk of bankruptcies and a lot of bad debt on their hands.
And it’s not chump change. Forbes points to a private equity investor who procured a $10 million investment for one of the companies in his portfolio. The hedge fund doling out the money never sent a representative to a due diligence meeting. When asked why, the hedge fund responded, "For a $10 million investment, it’s not worth sending someone."
Forbes points to unsustainably low default rates. According to Moody’s the current default rate for speculative grade bonds is 1.8 percent, well below the historical average of 5 percent. But many experts say that statistic will reverse quickly, with estimates averaging in the 2.5 percent to 3 percent range. Some even say the default rate could explode to around 7 percent or 8 percent.
"The default rates seem unsustainably low, at the same time the volume of potential candidates has never been higher," Mark Sunshine, CFO of financial services firm First Capital, tells Forbes.
"I think when [a correction] comes, and it is coming, it's going to be a big one," warns Jay Goffman, a partner in the corporate restructuring department at law firm Skadden Arps.
* * * * *
Paulson: Hedge Funds Positive for Market
U.S. Treasury Secretary Henry Paulson said Friday it was important to make sure hedge fund liquidity and borrowing were closely monitored, but said they were making a helpful contribution to financial markets.
February 17, 2006
Aloha Air prepares
to depart bankruptcy
By Dave Segal, Star-Bulletin
ALOHA AIRLINES had a gun to its head from the start.
When it filed for bankruptcy just more than 13 months ago, it could not afford employee payroll. Its unions were balking at what would become the first of two rounds of concessions. And liquidation was an all-too-real possibility for an airline that had mounting debt and just $2 million left in cash.
Then things got worse: soaring fuel costs, a demand from lenders to shut down mainland flights, a 15.5 percent loan interest rate and last-minute appeals to its reorganization plan.
But the state's second-oldest airline somehow survived. And in a turbocharged pace for an airline bankruptcy, Aloha plans to emerge from reorganization around noon today with new owners, a $63 million cash infusion that it will use to pay off existing liabilities, a $15 million term loan and a $20 million revolving line of credit it can tap if necessary.
"(Liquidation was mentioned) so many times that people said we were crying wolf, but I wasn't," David Banmiller, president and chief executive of Aloha Airlines, said this week. "We had to find a way to pull it off because failure was not an option."
Banmiller would not detail Aloha's plans, but he did say the airline will begin another daily flight to Orange County, Calif., in April and plans to add more routes next year. The airline is sticking with its long-haul 737-700s for now but is "re-evaluating the fleet mix," he said.
The near death of Aloha's mainland routes came in June. The company's lenders, Goldman Sachs and Ableco Finance LLC, asked Aloha to shut down its mainland operations and return all its long-haul 737-700s because Aloha was in default of its loan agreement....
http://starbulletin.com/2006/02/17/news/story02.html
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